Does the Nobel Peace Prize improve the world, or is it just a money-wasting ego trip?

The uproar over President Obama's Nobel reminded me of a question I've had for a while. Are prizes really an effective way of improving the world or just a money-wasting ego trip?

—Pamela

Sandy:

Do-good prize season—less glamorous than the Oscars, but contentious nonetheless.

The MacArthur Fellows (often called the "Genius" awards) were announced a few weeks ago and last Friday—well, you know. While everyone else is trying to figure out whether President Obama should have won the Nobel Peace Prize, I'm happy to ponder whether the Nobel Peace Prize should exist at all.

There are generally two kinds of prizes that try to improve the world. The first, like the Nobel, awards those who have made the world better in extraordinary ways. The second, like the X Prize, tries to incentivize innovation that could have enormous impact in the future.

Ideally, prizes such as the Nobel and MacArthur honor the people, organizations, and values we admire. I often talk about using your money, time, and voice to enact change, and these awards can certainly magnify the winners' voices. But, perhaps naively, I can't imagine that any of the winners wouldn't be doing the work they are doing if the prize didn't exist. Would I use my limited charity dollars to award prizes? Probably not. But am I happy that we live in a society that gives a world-renowned prize to someone advocating for peace? Absolutely.

The second type of prizes, however, do encourage investment in innovation that either wouldn't happen without the prize or would happen a lot more slowly. That's the whole point of them. Peter Diamandis, the founder of the X Prize, wanted to encourage visionaries and risk-takers to build commercial spacecraft, and he modeled the X Prize after the contest that led Charles Lindbergh to fly across the Atlantic in 1927. Now he plans to use the same idea to take on the biggest challenges in alternative energy, education, global poverty, cancer, and health care. Other organizations are following suit. Netflix awarded $1 million to a team that improved the algorithm that predicts whether you'll enjoy a movie. While that might not be the type of world improvement to which you were alluding, this model can be applied to vaccine creation, clean water systems, and other world improvements the free-market hasn't helped to move along.

Of course there are downsides to such prizes. When money is given after the fact, only individuals and organizations that can self-fund can participate, often elbowing out the little guy. Innovation prizes work better in inducing scientific breakthroughs than in causing social change. And it's not an easy task to pick an innovation that is ambitious yet achievable. But even if innovation prizes aren't as much of a panacea as some would have you believe, I think they can play an important role in driving neglected research forward.

March 3 2015 1:39 PMThe “Most Pleasurable Portrayal of Libertarianism“ Bonus SegmentDavid, Emily, and John discuss what Parks and Recreation got right about government.Emily Bazelon, David Plotz, and John Dickerson